Influx of immigrants can benefit economy

Proponents of immigration reform have good reason to celebrate. Not only did President Obama highlight the issue in his State of the Union, but several Republican leaders have promised to make the issue a priority.

The evidence for the economic benefits of a more streamlined immigration process is undeniable. Immigration is a huge benefit for the American economy – that’s the message proponents of reform need to focus on.

Contrary to the argument typically made by immigration opponents, an influx of foreign workers does not hurt U.S. job creation. A 2011 study by the American Enterprise Institute found that immigration has “no statistically significant effect, either positive or negative, on the employment rate among U.S. natives.” Researchers found that states with greater numbers of temporary workers actually had higher employment rates among natives.

Meanwhile, a 2009 study from the Center for Global Trade Analysis looked at various immigration reform scenarios and their effect on GDP. Under the scenario in which the U.S. deports all illegal immigrants (unlikely as that would be), GDP falls by 0.61 percent. However, when the researchers looked at what would happen under a policy of legalization and border control, GDP rose 0.17 percent.

Considering that the U.S. economy shrank in the fourth quarter of 2012, a 0.17 increase would be welcome news.

Why the positive correlation between immigration and economic activity?

According to the AEI scholars, employers “use guest workers not to replace American workers but to fill critical needs.” As a result, they can grow their operations and create even more jobs. Although derided by critics, the phrase “jobs Americans won’t do” is an economic reality for thousands of U.S. businesses.

Reform opponents also often claim that immigration depresses wages for American workers.

Again, the data suggest otherwise. The Migration Policy Institute found that immigration actually has a positive effect on wages for native-born workers.

Immigrants enhance our economy’s productive capacity, attract investment, and spur specialization – all of which boost GDP and average wages.

Any immigration reform solution must address not only those immigrants who are here illegally, but also the highly skilled would-be immigrants waiting in line. Their potential contribution to the economy should be obvious.

Google, Yahoo!, Intel, and eBay – to name just a few of today’s most successful U.S. companies – were all started by highly-skilled immigrants.

A 2009 study from the Kauffman Foundation found that for fully a quarter of the high-tech American firms founded between 1995 and 2005, the chief executive or top technologist was born abroad. Similarly, a 2011 study from the National Foundation for American Policy found that at America’s top 50 venture capital-funded companies, 46 percent had at least one immigrant founder.

Many of these immigrants study at American universities. Rather than give them a green card immediately upon graduation, we often blindly ship them home. We’re encouraging them to build their businesses elsewhere when they’d rather stay here.

I include myself in the latter category. I was born in the former Soviet Union, but had the opportunity to grow up and study in the U.S. As a first-generation U.S. citizen, I know how lucky I was to build my life in America.

But there are millions like me who aren’t as fortunate.

America’s population is aging. The baby boomers are hitting their golden years. And we know from Japan that a top-heavy national age distribution means disaster for the economy. There are too few workers and too many people dependent on public social services. Once an economic powerhouse, Japan has suffered from two decades and counting of stagnation and appears to be on an inexorable march to further decline.

However, an influx of immigrants can compensate for an older native population. That’s precisely what has happened in Canada. National leaders have constructed a smart and streamlined immigration pathway that has proved particularly attractive to Chinese workers. Today, about one in five Vancouver residents is Chinese. And the city is economically booming.

When searching for opportunity, the average immigrant’s first choice is often the United States. But unless we get serious about the economic ramifications of inaction, capable and intelligent people will go elsewhere.

The loss to the U.S. economy will be massive.

Vanetik is a principal at Dominion Partners, a private equity real estate firm, and a Lincoln Fellow at the Claremont Institute. He also serves on the national boards of Gen Next (www.gen-next.org (www.gen-nextfoundation.org